12-11 End of Day: Follow Through Weakness Leads Wheat and Corn Lower, Despite Sharply Higher Soybeans
All prices as of 2:00 pm Central Time
| Corn | ||
| MAR ’24 | 481.5 | -4 |
| JUL ’24 | 503.5 | -2.5 |
| DEC ’24 | 510.75 | -1.75 |
| Soybeans | ||
| JAN ’24 | 1336 | 32 |
| MAR ’24 | 1353.25 | 30.25 |
| NOV ’24 | 1288.25 | 17.75 |
| Chicago Wheat | ||
| MAR ’24 | 609.5 | -22.25 |
| MAY ’24 | 619.25 | -21.25 |
| JUL ’24 | 625.75 | -19.75 |
| K.C. Wheat | ||
| MAR ’24 | 632.25 | -28.75 |
| MAY ’24 | 637 | -29.5 |
| JUL ’24 | 640 | -29.75 |
| Mpls Wheat | ||
| MAR ’24 | 711.75 | -17.75 |
| JUL ’24 | 728.25 | -17.5 |
| SEP ’24 | 737 | -16.25 |
| S&P 500 | ||
| MAR ’24 | 4673.75 | 13.5 |
| Crude Oil | ||
| FEB ’24 | 71.59 | 0.15 |
| Gold | ||
| FEB ’24 | 1996.4 | -18.1 |
Grain Market Highlights
- Carryover weakness from the wheat market, weak export inspections, and a looming 2.1 billion bushel carryout all weighed on the corn market which closed back below the 50-day moving average on the nearby continuous chart.
- Another large private sale to unknown destinations and renewed South American weather concerns lent support to the soybean market which gapped higher on Sunday night’s open and closed near the top of its 31 ½ cent range.
- Soybean meal and oil both closed very strong alongside soybeans with 8.5 and 0.91 gains respectively. Soybean meal is currently showing signs of being very oversold, much like soybeans, which is likely adding support to the market.
- Weak export inspections may have added fuel to the fire as traders sold all three wheat classes on follow through technical weakness after showing signs of being overbought from the recent rally.
- To see the updated US 8 – 14 day temperature and precipitation outlooks, and South America’s 2-week forecast precipitation maps, courtesy of the National Weather Service, and Climate Prediction Center, scroll down to other Charts/Weather Section.
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Corn
Action Plan: Corn
Calls
2023
No Action
2024
No Action
2025
No Action
Cash
2023
No Action
2024
No Action
2025
No Action
Puts
2023
No Action
2024
No Action
2025
No Action
Corn Action Plan Summary
- No new action is recommended for 2023 corn. Since the beginning of August, the corn market has traded sideways largely between 470 and 500. October’s brief breakout to 509 ½ and the subsequent failure to stay above the 50-day moving average indicates there is significant resistance in that price range. The failure of December’s USDA report to provide a bullish influence on the market puts the market at risk of drifting sideways to lower without a bullish catalyst. During last summer’s June rally, Grain Market Insider recommended making sales when Dec ’23 was around 624. For now, Grain Market Insider will continue to hold tight on any further sales recommendations for the next few weeks with the objective of seeking out better pricing opportunities. If the market has not turned around by then, Grain Market Insider may sit tight on the next sales recommendations until spring.
- No new action is recommended for 2024 corn. Since late February ’22, Dec ’24 has been bound by 485 ¾ on the bottom and 602 on the top. After testing 491 to 547 last July, it has mostly traded between 500 and 525. During this time, Dec ’24 has held up better as bear spreading has allowed Dec ’24 to maintain more of its value versus old crop prices as traders attempt to price in a larger 2023 carryout with more uncertainty remaining for the 2024 crop. Moving forward, the risk for 2024 prices is the same as for 2023 prices, which is a continuation of a sideways to lower trend without a bullish catalyst. Grain Market Insider is watching for signs of a change in the current trend to look at recommending buying Dec ’24 call options. This past spring, Grain Market Insider recommended buying Dec ‘23 560 and 610 call options ahead of the summer rally and having those in place helped provide confidence to pull the trigger on recommending 2023 sales into that sharp rally, knowing that if corn kept rallying and went to 700 or 800 that the call options would protect those sold bushels.
- No Action is currently recommended for 2025 corn. Grain Market Insider isn’t considering any recommendations at this time for the 2025 crop that will be planted two springs from now. It will probably be late winter or early spring of 2024 before Grain Market Insider starts considering the first sales targets.
To date, Grain Market Insider has issued the following corn recommendations:
Market Notes: Corn
- Aggressive selling in the wheat market dragged the corn market lower on the session. The March corn contract closed 4 cents lower, and below the 10-day moving average, which could bring additional selling pressure into the overnight session.
- Despite the small increase in export demand in Friday’s WASDE report, corn ending stocks are still heavy in the market’s mind at 2.135 billion bushels. A stocks-to-use ratio of 14.7% is the largest in 5-years and projects to potentially lower corn prices to trigger additional demand.
- With the recent prices rally, the funds decreased their net short position in the corn market by 45,000 contracts to –160,533 net short contracts. The price move was disappointing, only being 20-25 cents for that short liquidation. The decreased short position opens the door for additional selling pressure in the corn market in the short term.
- Soybeans rallied aggressively to start the week, but that spill over support was ignored by the corn market. The Brazil weather forecast turned warmer and drier on afternoon models, and that triggered buying in the soybean market to start the week.
- After a strong week last week, weekly export inspections for corn were disappointing at 712,000 MT (28 mb) at the low end of expectations. Total inspections in 2023-24 are now at 361 mb, up 28% from the previous year. The USDA is estimating corn exports at 2.100 bb in 2023-24, up 26% from the previous year.
Above: Since the lead month rolled to the March contract, the corn market has been rangebound between 470 on the downside and 497 on the upside. Upside resistance appears to be heavy given the bearish reversal that was posted on December 6. That heavy resistance also extends up to the October high of 509 ½, which the market will need more bullish influence to trade through. If the market retreats through nearby 470 support, major support remains near 460.
Soybeans
Action Plan: Soybeans
Calls
2023
No Action
2024
No Action
2025
No Action
Cash
2023
Active
Sell JAN ’24 Cash
2024
No Action
2025
No Action
Puts
2023
No Action
2024
No Action
2025
No Action
Soybeans Action Plan Summary
- Grain Market Insider sees a continued opportunity to sell a portion of your old crop 2023 soybean production. Since last summer, the soybean market has been mostly rangebound between 1435 on the topside and 1251 on the bottom. Within this range, the 1330 area has been a strong pivot point. Getting over 1330 the front month has been able to challenge the 1400 area, but below 1330 the front month has challenged the 1250 area. Today, the January contract attempted to get back over 1330, with an intraday high of 1330 ¾, but was rejected. This rejection poses the risk that the front month could challenge the 1250 area again. Also, given the projected record large global carryout of soybeans, Grain Market Insider wants to take advantage of the historical value of 1300+ soybean prices.
- No action is recommended for the 2024 crop. Since the inception of the Nov ’24 contract, it has traded at a discount to the 2023 crop from as much as 142 back in July, to as little as 17 ¾ in early October during harvest. While the spread difference between the two crops has seen a good amount of volatility, Nov ’24 has been largely rangebound between 1250 and 1320 since it rallied off its 1116 ¼ low last May. To date, Grain Market Insider has not recommended any sales for next year’s soybean crop. First sales targets will probably be early winter at the earliest. Currently, Grain Market Insider’s focus is also on watching for any opportunities to recommend buying call options.
- No Action is currently recommended for 2025 Soybeans. Grain Market Insider isn’t considering any recommendations at this time for the 2025 crop that will be planted two springs from now, and it may be some time before conditions are conducive to consider making any recommendations. Be patient as we monitor the markets for signs of improvement.
To date, Grain Market Insider has issued the following soybean recommendations:
Market Notes: Soybeans
- Soybeans ended the day sharply higher with support from higher soybean meal and oil, along with another export sale reported to China. South American weather was supportive as well today with heat and dryness forecast this week before rains are expected to fall later in the week.
- Export inspections were a little soft today with the USDA reporting inspections at 36.2 mb for the week ending Thursday, December 7. Total inspections for 23/24 are now at 725 mb, which is down 16% from the previous year. The USDA is estimating total soybean exports at 1.755 bb for 23/24 which would be down 12% from the previous year.
- Another flash sale was reported this morning by the USDA totaling 132,000 metric tons of soybeans for delivery to unknown destinations during the 23/24 marketing year. This follows up on two sales from last Thursday and Friday which were 121,000 metric tons and 136,000 metric tons to unknown and China.
- Traders were likely expecting more bullish numbers in Friday’s WASDE report, so the lack of any big changes caused some selling. Ending stocks were unchanged at 245 mb, but Brazilian production was lowered to 161 mmt from 163 mmt.
Above: Since retreating from the November highs, soybeans traded through 1297, but held support around 1292. If prices retreat lower through 1292, they could test support near 1250. Up above, psychological resistance may enter in near 1350, with heavy resistance up near recent highs around 1400.
Wheat
Market Notes: Wheat
- All three US wheat futures classes posted double-digit losses today. The weakness may have stemmed partly from a technically overbought situation. On daily stochastics, each of the three March wheats show a sell crossover signal, with momentum turning downward. In addition to the technical weakness, funds may be adding back to short positions after last Friday’s USDA report did not offer friendly news to feed the bull.
- Wheat inspections of 10.4 mb bring the 23/24 total inspections to 316 mb. That is down 23% from last year and is behind the pace needed to meet the USDA’s goal of 725 mb from Friday’s updated WASDE report.
- Forecasted rains in the US southern Plains for the middle of this week are expected to limit upside potential for the wheat market, with areas of Texas and Kansas expected to receive widespread coverage. As of the last Crop Progress report, winter wheat conditions are much more favorable compared to last year.
- There is talk that China may be interested in purchasing more US wheat, but with Russia still offering wheat for sale at cheap prices, more friendly news may be needed to rally the market. Unfortunately, there are concerns that demand from north African and Middle Eastern nations may be down from normal and last year.
- Ukraine’s farm ministry has stated that the country reached a record grain yield, and they increased the 2023 harvest estimate to 59.7 mmt. Of that total, wheat harvest is expected to account for 22.2 mmt.
- This week, traders will receive the next statement from the Federal Reserve regarding interest rates. Current expectations are that they may keep rates steady, but last week’s jobs data offered signs of labor market strength. This may mean that they will stick with their “higher rates for longer” stance, which may in turn affect commodity markets like wheat.
Action Plan: Chicago Wheat
Calls
2023
No Action
2024
No Action
2025
No Action
Cash
2023
No Action
2024
No Action
2025
No Action
Puts
2023
No Action
2024
No Action
2025
No Action
Chicago Wheat Action Plan Summary
- No new action is currently recommended for 2023 Chicago wheat. Between late July and the end of November, front month Chicago wheat trended lower, driven mostly by weak US demand and lower world wheat prices. During that time, and as managed funds established most of their short position of nearly 120,000 contracts, the market became extremely oversold. Since then, as the market rallied to a high of 649 ½, China made several US SRW wheat purchases, and funds covered more than 23,000 short contracts. During that runup, Grain Market Insider recommended making an additional sale to take advantage of the elevated prices in case the rally was temporary since US wheat prices remain elevated relative to other world exporters, despite the increase in demand. If the market remains strong and continues to rally, Grain Market Insider will consider potential re-ownership strategies to protect current sales and add confidence to make additional sales at higher prices.
- No new action is recommended for 2024 Chicago wheat. Since July, new crop Chicago wheat has slowly worked its way lower with no significant opportunities to make additional sales. The lower market was driven mostly by managed fund selling from lower world wheat prices and weak US demand. As the market sold off, it became significantly oversold with managed funds building a short position in excess of 100,000 contracts. While bearish headwinds remain, the large fund short position and oversold condition of the market are two factors that could fuel a sizeable, short-covering rally. Additionally, price seasonals are supportive as prices tend to build in some risk premium going into the winter months. At the end of August, Grain Market Insider recommended purchasing July 590 puts to prepare for further price erosion, and back in June, Grain Market Insider recommended two separate sales that averaged about 720 to take advantage of the brief upswing. If the market receives the needed stimulus to move prices back toward this summer’s highs, Grain Market Insider is prepared to recommend adding to current sales levels and possibly even purchasing call options to protect those sales. Otherwise, the current recommended put position will add a layer of protection if prices erode further, and Grain Market Insider will be prepared to recommend covering some of those puts to offset much of the original cost and move toward a net neutral cost for the remaining position.
- No action is currently recommended for 2025 Chicago Wheat. Grain Market Insider isn’t considering any recommendations at this time for the 2025 crop that will be planted next fall. It will probably be mid-winter before Grain Market Insider starts considering the first sales targets.
To date, Grain Market Insider has issued the following Chicago wheat recommendations:
Above: After rallying to 649 ½ on short covering activity largely, from being oversold, Chicago wheat became overbought and began to turn lower following the December 8 USDA update. Overhead resistance comes in near 650, and again between 660 and 665. The overbought status of the market may encourage additional selling and a test of the 50-day moving average near 580, with further support near 556.
Action Plan: KC Wheat
Calls
2023
No Action
2024
No Action
2025
No Action
Cash
2023
No Action
2024
No Action
2025
No Action
Puts
2023
No Action
2024
No Action
2025
No Action
KC Wheat Action Plan Summary
- No new action is recommended for 2023 KC wheat crop. Since late July old crop KC wheat has been in a downtrend that has largely been driven by managed fund selling on low world wheat prices and weak US export demand. As the selloff progressed, the market became oversold, and the funds established the largest short position in three years. Even though bullish headwinds remain, these two factors have fueled the recent short-covering rally, which could extend much further if a bullish catalyst enters the market. This would also line up with the historical tendency for price appreciation as the market builds risk premium going into wintertime. Grain Market Insider’s strategy is to look for price appreciation going into this winter, as weather becomes a more prominent market mover and may consider suggesting additional sales if prices become over extended.
- No new action is recommended for 2024 KC wheat. At the end of August, the Jul ’24 contract broke out of roughly a one-year trading range, between 740 and 860, to the downside. Since that breakout, the market has continued to slowly stair-step lower, largely driven by managed fund selling, weak US export demand, and lower world wheat prices. As the selloff progressed, the funds built up the largest net short position in three years. While bearish headwinds remain, the significant oversold condition of the market and the large fund net short position are two factors that could fuel a short-covering rally in the months ahead. Price seasonals are also supportive as prices tend to build in some risk premium going into the winter months. Back in August, Grain Market Insider recommended buying Jul’24 KC wheat 660 puts to protect the downside following the range breakout. Though as the market recently got further extended into oversold territory and the July contract showed signs of support near 630, Grain Market Insider recommended exiting 75% of the originally recommended position. Moving forward, Grain Market Insider is prepared to recommend exiting the last 25% on any further supportive market developments.
- No action is currently recommended for 2025 KC Wheat. Grain Market Insider isn’t considering any recommendations at this time for the 2025 crop that will be planted next fall. It will probably be mid-winter before Insider starts considering the first sales targets.
To date, Grain Market Insider has issued the following KC recommendations:
Above: Minneapolis wheat continues to appear rangebound between about 750 on the topside and 700 on the bottom. If prices can break through upside resistance, they could run toward 790. Otherwise, if prices break out of the bottom end of the range, support may come in near the late May ’21 low near 669.
Action Plan: Mpls Wheat
Calls
2023
No Action
2024
No Action
2025
No Action
Cash
2023
No Action
2024
No Action
2025
No Action
Puts
2023
No Action
2024
No Action
2025
No Action
Mpls Wheat Action Plan Summary
- No new action is currently recommended for the 2023 New Crop. Following last July’s rally, the market has slowly stair-stepped lower, primarily due to low world wheat prices, weak US export demand, and managed fund selling. With the funds building a record large short position as the market sold off. Since weak US export demand remains the main impediment to higher prices, the market continues to be at risk of further downside erosion. The record large fund short position could fuel a rally back higher if a bullish catalyst enters the scene, and if that happens, it may signal that a near-term low is in place. Earlier this year, Grain Market Insider made a sales recommendation during the July rally near 820, and with that sale in place, Grain Market Insider’s strategy is to look for price appreciation this winter with an eye on considering additional sales around 725 – 775, and again north of 800. If at that point the market remains strong and continues to rally, Grain Market Insider will consider potential re-ownership strategies to protect current sales and add confidence to make additional sales at higher prices.
- No new action is recommended for 2024 Minneapolis wheat. At the end of August, the Sept ’24 contract traded to a peak of 871 ¾ and has continued to slowly stair-step lower, largely driven by lower world wheat prices, weak US export demand, and managed fund selling, and as the selloff progressed, the funds built up a record large short position. While bearish headwinds remain, the significant oversold condition of the market and the large fund net short position are two factors that could fuel a short-covering rally in the months ahead. Price seasonals are also supportive as prices tend to build in some risk premium going into the winter months. Back in August, Grain Market Insider recommended buying July ’24 KC wheat 660 puts to protect the downside following a 1-year range breakout in KC wheat. Though recently, as the KC market extended further into oversold territory and the July ‘24 KC wheat contract showed signs of support near 630, Grain Market Insider recommended exiting 75% of the originally recommended position. While in the same time frame, Grain Market Insider also recommended making an additional sale as the Sept ’24 Minneapolis contract broke long time 743 support. For now, moving forward, Grain Market Insider is prepared to recommend exiting the last 25% of the open puts on any further supportive market developments.
- No action is currently recommended for the 2025 Minneapolis wheat crop. Grain Market Insider isn’t considering any recommendations at this time for the 2025 crop that will be planted two springs from now. It will probably be mid-winter before Grain Market Insider starts considering the first sales targets.
To date, Grain Market Insider has issued the following Minneapolis wheat recommendations:
Above: After making a new contract low on November 27, the March contract found buying interest from its oversold status and record fund short. Since then, the market posted a bearish reversal on December 6, showing significant resistance in the 750 area. If prices can break through upside resistance, they could run toward 790. If prices retreat, nearby support could be found around 718, with further support near the recent low of 697 ½.
Other Charts / Weather
